High level review of key characteristics of the steel industry in Ukraine, including steel demand volume, flat product demand, tube demand, and producers' apparent capacity expansion plans.

1. The Steel Industry in Ukraine April 2008

4. FLAT PRODUCT DEMAND † Figures are Ukrainian finished steel demand estimates for 2007. Source: MCI assessments. Source: MCI assessments. † : For corresponding Ukrainian or other CIS steel long product figures, please contact MCI. Note the very marked export orientation Coated ratio at 15% of flat is very low – ratio is ~44% in EU 4.48 Demand 9.29 Export 1.19 Import 12.58 Production mt 2007 data 4.48 Total 0.67 Coated 0.52 Cold rolled 1.70 Hot rolled 1.59 Plate mt Product

5. STEEL TUBE DEMAND Figures are MCI estimates. LDP denotes large diameter pipe; SDP and MDP are small and medium diameters. Source: MCI assessments. LDP demand structure, 2007 Primarily Khartyzsk [MetInvest Holding] but also Novomoskovsk [Interpipe]† † : Both plants produce longitudinal weld rather than spiral weld large diameter pipe (LDP). LDP is defined in terms of a 16” cut-off point [equivalent to 406.4mm diameter and above.] 0.89 Demand 0.43 Welded – SDP/MDP 0.06 Welded - LDP 0.40 Seamless mt 2007 data 4.48 Total 60 Demand 538 Export 16 Import 582 Production Kt Item

6. CAPACITY EXPANSION PLANS Source: Iron & Steel Works of the World, steel sector press reports incl www.steelonthenet.com/news.php . Long product modernisation plans include 2009 long product Mill 390 modernisation at the Makeevsky Metallurgical Works [720 kt/year facility, 8-60mm diameter] and two new long product rolling mills at Enakievsky [2010 upgrade] Modernisation timeframe above is the next ~5 years approx. Flat includes pickling and possibly hot rolling Y Y Y Zaporozhstal Rumoured; could be Bulgaria / Romania Y Y Y VoestAlpine DRI based EAF steelmaking; slab only Y Y Vorksla Stal MCI expectation Y Y Y Krivoy Rog Funding issue? Y Y Ilyich Incl billet cc for long product modernisation Y Dneprovsky New HSM under discussion: see ISWW Y Y Y Alchevsk Comment Flat Slab Steel Company

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